1. IATA new financial local criteria for travel agents

2. 2 Due to a certain number of travel agents bankruptcies in 2006 (12.8 M€), 2007 (12.7 M€) and 2008 (15.8 M€)*,IATA had decided, in early 2009, to increase the level of financial criteria for the purpose of admitting new IATA agents. * for the previous years the cost of bankruptries for IATA was around 6 M€ / year

3. 3 Before 2009, the financial criteria for french travel agents to appointed as IATA agents were the following : Capital resources ≥ 0 Capital resources ≥ 1% net cash BSP turnover Long term capital / fixed values ratio ≥ 1 Working capital ≥ 0 (date of remittance = 17 of following month or 1st following working day).

4. 4 The new criteria proposed by IATA on 8 July 2009 were the following : –A new item « General Liquidity Ratio (GLR) » (current assets / current liabilities) was introduced and was to trigger the possible remittance of a bank guarantee = GLR ≤ 1, bank guarantee of 100% of 2 months of net cash sales 1 < GLR ≤ 1,05, bank guarantee -25% of 2 months of net cash sales 1,05 < GLR ≤ 1,10, bank guarantee -50% of 2 months of net cash sales 1,10 < GLR ≤ 1,15, bank guarantee -75% of 2 months of net cash sales GLR > 1,15, no bank guarantee –A new date of remittance 15 of following month or 1st working day.

5. 5 The impact of such changes : –More than 50% of IATA French agents (around 700) do not meet the new financial requirements ; –10% of IATA French agents would be unable to get an appropriate bank guarantee.

6. 6 The procedure followed by IATA to implement these changes : IATA adopted the financial new criteria for France at PAConf / 32 (item R 25) and published them on 16 November 2009 for an effectiveness on 1 January 2010.

7. 7 One 15 December 2009, one IATA agent, AFAT Tourisme et Affaires, supported by the SNAV, challenged this PAConf decision before the Travel Agency Commissioner, pursuant to IATA Resolution 818 §4.1.6. The ground for challenging the IATA decision was that, contrary to Resolution 818 §2.1.4., PAConf decision was not recommended by the French local APJC. Indeed, on 8 July 2009, APJC did not formally adopt the changes as the travel agents reprensatives voted against such changes.

8. 8 IATA argued that recommendation by the local APJC was not necessary and could not prevent PAConf decisions (“no veto right !”). However a precedent had occurred in the Netherlands = PAConf 31 held in October 2008, voted in favor of an APJC-NL proposal but, after the above mentioned PAConf, airlines and agents in APJC-NL agreed to discuss further on this issue and to submit a new proposal to the PAConf.

9. 9 A hearing before the Travel Agent commissioner took place in Paris in February 11, 2010 and, by decision dated 25 March 2010, the said Travel Agent Commissioner ruled that, due to the fact PAConf / 32 item R 25 had not been formally recommended by the local French APJC, the decision regarding the new local financial criteria applicable to the French IATA agents was not to be applied to the applicant AFAT Tourisme et Affaires (see decision).

10. 10 After this decision was rendered, IATA decided to globally disregard PAConf / 32 item R 25 and to send the issue back to the French local APJC “for recommendation”. A new APJC then took place in July 2010 and recommended that only a liquidity ratio ≤ 1,10 would trigger the remittance of a bank guarantee, this new criteria to be introduced in… 2014.

11. 11 PS : The default risk does not only concern IATA agents : It also concerns IATA members. On 16 August 2010, the SNAV obtained to put into escrow within IATA settlement plan the ticket fares issued on Mexicana and to have IATA dispatch such fares between Mexicana and the French travel agents depending of the effectiveness of flights (see decision).